Paysafe Group — Niche payments focus drives growth

Paysafe Group — Niche payments focus drives growth

Paysafe reported FY16 results in line with expectations, after upgrading its outlook in January. The company saw strong organic growth in all divisions and continues to consider acquisitions that meet its preference for relevant, niche-orientated payments solutions. The stock continues to trade at a material discount to peers – a gradual reduction in the relative contribution of the company’s largest merchant should help reduce this.

Katherine Thompson

Written by

Katherine Thompson

Director

Paysafe Group

Niche payments focus drives growth

FY16 results

Software & comp services

15 March 2017

Price

447.8p

Market cap

£2,168m

$1.22:€1.14:£1

Net debt ($m) at end FY16*

*Includes deferred financing fees

279.8

Shares in issue

484.4m

Free float

98.7%

Code

PAYS

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

7.9

35.5

16.4

Rel (local)

6.7

27.7

(1.6)

52-week high/low

469.2p

305.7p

Business description

Paysafe Group is a global payment solutions specialist operating in three areas: payment processing, digital wallets and prepaid services.

Next events

Trading update

July 2017

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Dan Ridsdale

+44 (0)20 3077 5729

Paysafe Group is a research client of Edison Investment Research Limited

Paysafe reported FY16 results in line with expectations, after upgrading its outlook in January. The company saw strong organic growth in all divisions and continues to consider acquisitions that meet its preference for relevant, niche-orientated payments solutions. The stock continues to trade at a material discount to peers – a gradual reduction in the relative contribution of the company’s largest merchant should help reduce this.

Year end

Revenue ($m)

EBITDA*
($m)

EPS*
(c)

DPS
(c)

P/E
(x)

EV/EBITDA (x)

12/16

1,000.3

300.8

42.1

0.0

13.0

9.7

12/17e

1,103.9

332.5

44.6

0.0

12.3

8.8

12/18e

1,203.0

364.8

48.6

0.0

11.2

8.0

12/19e

1,298.1

398.9

52.7

0.0

10.4

7.3

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

FY16 results in line; net debt reducing fast

Paysafe reported FY16 revenue and EBITDA in line with its January trading update. Each division generated strong organic constant currency revenue growth (21% group growth), supporting the company’s unchanged guidance for low double-digit organic revenue growth in FY17. Gross margins were stronger than we expected, offset by higher opex (mainly to boost the legal and compliance function in advance of changes to anti-money laundering regulations). The company ended FY16 with a net debt position of $280m, down from $431m at the end of FY15, equivalent to a net/adjusted EBITDA ratio of 0.9x.

Positive outlook, prepared for regulation

Our forecasts previously assumed the company used the full £100m to buy back shares. As the share price has recovered from its low of 306p in December, we now assume that shares are only bought back if the share price drops materially and account for this as it happens. We have made minor changes to our FY17 and FY18 forecasts, with slightly higher opex reducing our normalised EPS forecasts by 3.0% and 5.8% respectively (growth 6.1% in FY17 and 8.9% in FY18). We introduce an FY19 forecast for 7.9% revenue growth, 30.7% EBITDA margins and normalised EPS growth of 8.5%.

Valuation: Steady progress to reduce the discount

Paysafe continues to trade at a significant discount to peers: the company is trading at a c 30% discount on an FY17e EV/EBITDA basis and a more than 40% discount on an FY17e P/E basis. While some discount is warranted to reflect the potential risk within the Asia Gateway business, in our view this discount is excessive. Continued revenue growth, steady cash generation and a gradual reduction in the relative contribution of the company’s largest merchant should help reduce this discount. The company continues to include M&A in its near-term plans, and in our view the company has substantial headroom to fund suitable acquisitions.

Review of FY16 results

Exhibit 1: Actuals versus estimates, FY16

$'000

FY16e

FY16a

Difference (%)

Growth y-o-y (%)

Payment Processing revenues

471,719

467,790

-0.8

24.7

Digital Wallet revenues

307,976

311,023

1.0

95.4

Prepaid revenues

213,896

213,743

-0.1

179.8

Total revenues

1,000,457

1,000,282

0.0

63.1

Gross margin (%)

53.1

54.3

1.2

5.9

EBITDA

300,902

300,825

0.0

97.2

EBITDA margin (%)

30.1

30.1

0.0

5.2

Normalised PBT

241,611

241,868

0.1

103.6

Normalised net income

207,785

212,968

2.5

95.9

Normalised EPS (c)

41.0

42.1

2.7

64.7

Reported EPS (c)

29.1

29.4

1.0

1485.9

Net debt*

263,291

264,019

0.3

Source: Paysafe, Edison Investment Research *Before deferred financing fees of $15.8m

Paysafe reported revenues of $1bn in FY16, in line with its January trading update. Gross margin increased 594bp to 54.3% in FY16, mainly due to mix. The company increased headcount by 538 over the year to 2,116, resulting in an increase in operating expenses (excluding depreciation and amortisation) of 68% on a reported basis. Much of the headcount increase was to build up the company’s risk management and compliance function to ensure the business is prepared for new regulations relating to money laundering. In addition, the company hired more product developers and scaled up operations and customer support ahead of expected growth of the business. Despite this, the company expanded its EBITDA margin from 24.9% to 30.1% y-o-y. The adjusted operating margin also expanded y-o-y, from 21.7% to 26.8%. The company reported exceptional items totalling $8.2m, consisting of $5.6m of restructuring charges (the majority taken in H116), $2.2m of acquisition costs, FX losses of $6.8m, loss on disposal of assets of $0.8m and a fair value gain on share consideration payable of $7.2m. The effective tax rate increased to 11.9% from 8.5% a year ago – the company had guided that the rate would increase as profits are generated in higher tax regions. Normalised EPS came in 2.7% ahead of our forecast and showed 65% growth y-o-y.

The company reduced its net debt position by $151m (35%) from the end of FY15 and at year-end had reduced the net debt/EBITDA ratio to 0.9x (2.1x a year ago). Adjusted cash conversion before payments working capital as a percentage of adjusted EBIT was 101% in FY16, up from 92% a year ago.

Strategic update

The company outlined the progress it has made against its five strategic pillars over the last year:

Sustainable organic growth

Exhibit 2 shows the reported and organic revenue growth rates by division and for the group over the last three years. Clearly, strong organic growth has been achieved by the group while expanding gross margins.

Exhibit 2: Revenue growth rates and gross margins, H114-H216

(%)

H114

H214

H115

H215

H116

H216

FY15

FY16

Payment Processing

Reported revenue growth

31

53

47

28

34

17

37

25

Pro forma constant currency revenue growth

29

14

7

25

28

15

16

21

Pro forma constant currency revenue growth excl. major merchant

18

24

24

33

32

10

29

20

Reported gross margin

43

39

37

37

39

42

37

41

Digital Wallet

Reported revenue growth

46

53

20

127

195

50

78

95

Pro forma constant currency revenue growth

21

24

20

14

28

33

17

30

Reported gross margin

72

72

73

73

76

74

73

75

Prepaid

Reported revenue growth

N/A

N/A

N/A

N/A

N/A

42

N/A

180

Pro forma constant currency revenue growth

16

8

12

-2

0

19

5

10

Pro-forma/reported gross margin

50

50

50

51

52

53

51

53

Group

Reported revenue growth

34

53

40

90

118

32

68

63

Pro forma constant currency revenue growth

23

14

12

14

20

21

13

21

Reported gross margin

51

47

45

50

54

55

48

54

Source: Paysafe

Payment Processing

Reported revenue growth benefited from $13.5m revenues from the MeritCard acquisition (February 2016). Constant currency organic growth accelerated to 21% in FY16, up from 16% in FY15. Over the year, growth slowed (H1 28%, H2 15%), and if the major merchant is excluded, this is more evident (H1 32%, H2 10%). H2 growth reflects the tougher y-o-y comparison; in addition, the company took action to reduce the merchant risk profile, throttling volumes for merchants with high chargeback rates. The major merchant generated revenues of $3-4m from the 2016 UEFA championships which will not be repeated in 2017.

Volumes processed increased 30% y-o-y to $22.4bn; the take rate reduced to 2.1% from 2.2% last year, owing to the addition of MeritCard volumes which tend to have a lower risk profile and hence lower pricing.

Divisional gross margin increased from 36.9% in FY15 to 40.6% in FY16. 1% of this increase came from a change in the calculation of intercompany cost of sales. Otherwise, the division saw lower processing costs, and although bad debt costs were higher than a year ago, the rate fell h-o-h (H1 2.2%, H2 1.0%). We note that as a consumer facing company, payolution has a higher rate of bad debt – and this was the first full year of inclusion.

The recently launched acquiring business makes up a small percentage of revenues. Since the launch of its multi-currency cross border European acquiring service in 2016, the company has seen a good level of sign-ups by North American merchants and the first new European merchants.

Online gambling made up 29% of revenues in FY16, with online gaming making up 2%. The bulk (69%) of revenues is generated from e-commerce merchants, particularly in medium and high risk industries eg direct marketing, e-tail, professional services. The company is focused on developing its expertise in additional verticals.

Digital Wallets

Constant currency organic growth accelerated from 17% in FY15 to 30% in FY16. The business was strong through the year (H1 +28%, H2 +33%), including a c $4m (c 2%) boost from the UEFA championships. Reported revenues benefited from the $3.1m contribution from Income Access (acquired August 2016). The company increased volumes with existing merchants (partly through helping them expand into new territories and offering new payment options) as well as signing up new merchants and users.

Fees from online gambling merchants made up 61% of revenues with a further 5% from online gaming merchants. The remaining 34% of revenues was made up of fees from consumers (mainly linked to online gambling) as well as merchants operating in e-commerce.

The division processed volumes worth $22.9bn in FY16, 15% ahead of FY15 on a pro forma basis. The take rate increased from 1.2% in FY15 to 1.4% in FY16. This was boosted by fee rebasing across the two wallets as well as the initiation of fees for money transfers on NETELLER.

Gross margins grew from 72.9% in FY15 to 74.9% in FY16. Mix, the positive impact from fee rebasing and money transfer fees, and lower bad debt costs more than offset the 2.8% negative effect of reallocating intercompany costs of sale.

Prepaid

The Prepaid division reported revenue growth of 180% in FY16 and organic constant currency growth of 10% (FY15 5%). When Ukash was acquired, Skrill took the decision to discontinue the service in certain geographies. Excluding this, organic constant currency growth was 14%, up from 11% in FY15. The division successfully managed to restart its Greek business after capital controls were introduced in 2015, which explains some of the growth in H216 (H116 0%, H216 19%). Volumes in Greece are now equivalent to the level before the controls were introduced, and the division is now able to remove funds from Greece.

The division processed volumes of $2.8bn (+4% y-o-y) with a take rate of 7.7%, up from 7.5% in FY15 (pro forma). In FY16, the division benefited from the application of maintenance fees on unredeemed voucher balances from the Ukash business – as these balances decline, so will the fees generated.

61% of FY16 revenues were generated from online gambling, 18% from online gaming and the remainder from e-commerce and consumer fees.

Gross margins increased to 52.6% from 51.3% a year ago, benefiting from the maintenance fees on unredeemed balances.

The business is continuing to focus on expanding its geographic coverage, particularly in Latin America and MENA.

State-of-the-art technology

The company continues to work on developing a single platform. Its next-generation global data platform is being designed to enable analysis of data from all parts of the business for the benefit of the company and its merchants. It will also provide unified APIs and SDKs for developers so the platform can act as a single point of integration to the existing processing and digital wallet platforms. The new platform should make it easier for customers to connect to the full range of Paysafe’s services as well as make it easier to cross-sell. The company expects to start rolling out modules through the course of FY17.

The company launched its self-service developer portal in December 2016 to simplify on-boarding.

Relevant, niche-oriented solutions

Both precursor companies to Paysafe grew by providing services for niche areas of the payments market, including identifying the need for digital wallets in the online gambling space, providing payment processing for medium to high risk merchants (an area neglected by the banks and larger payment processors), and providing a means for consumers without bank accounts or credit cards to spend online. The company is keen to continue developing solutions to serve niche applications and will also consider acquisitions. In 2016, Paysafe soft launched its GOLO mobile pick-up and delivery product aimed at local merchants.

Entrepreneurial culture

The company bolstered the management team with the hires of Tim Thurman as Chief Digital Officer and Oscar Nieboer as Chief Marketing Officer.

Bold M&A

Paysafe acquired two companies in 2016 (MeritCard and Income Access) for a total consideration of $50.7m. The company continues to consider acquiring companies that fit with its strategy. With rapidly declining net debt (we expect the company to reach a net cash position in FY18), the company should be able to borrow a significant amount if necessary. Based on 3x FY17 forecast EBITDA of $332m, the net debt ceiling would be c $1bn, $920m above our forecast net debt position at end FY17 and before taking into account the target company’s EBITDA.

Outlook and changes to forecasts

The company maintained its outlook for 2017, supported by trading year-to-date: low double-digit organic revenue growth and EBITDA margins of at least 30.1%.

As the share price is now trading consistently above £4.00, we have assumed that the company halts the share buyback programme. We had previously assumed it would use the entire £100m to buy back c 25m shares. If the share price drops materially, we believe the company may resume the programme. It has c £75m remaining of the £100m to spend.

FY17: Our group revenue forecast is substantially unchanged. We reduce EBITDA by 0.9% to reflect higher opex (mainly for legal and compliance). We increase the tax rate by 1% to 16%. This combined with slightly higher depreciation and amortisation and reversing the bulk of the share buyback reduces normalised EPS by 3.0%.

FY18: Again, our revenue forecast is substantially unchanged with a 0.8% cut to EBITDA reflecting higher opex. We increase the tax rate by 2% to 17%. Our normalised EPS forecast reduces by 5.8%.

FY19: We introduce a forecast for revenue growth of 7.9% and an EBITDA margin of 30.7%. This results in normalised EPS growth of 8.5%.

Exhibit 3: Changes to forecasts

$'000

FY17e old

FY17e new

Change

(%)

Growth

(%)

FY18e old

FY18

new

Change

(%)

Growth

(%)

FY19

new

Growth

(%)

Payment Processing revenues

520,168

515,288

-0.9

10.2

573,326

566,644

-1.2

10.0

612,882

8.2

Digital Wallet revenues

344,702

344,684

0.0

10.8

369,253

368,707

-0.1

7.0

393,998

6.9

Pre-paid revenues

233,797

237,894

1.8

11.3

257,177

261,683

1.8

10.0

285,235

9.0

Total revenues

1,103,667

1,103,865

0.0

10.4

1,204,756

1,203,034

-0.1

9.0

1,298,114

7.9

Gross margin (%)

51.9

53.7

1.8

-0.6

51.3

52.7

1.3

-1.0

52.3

-0.3

EBITDA

335,428

332,487

-0.9

10.5

367,651

364,785

-0.8

9.7

398,866

9.3

EBITDA margin (%)

30.4

30.1

-0.3

0.0

30.5

30.3

-0.2

0.2

30.7

0.4

Normalised PBT

273,516

270,476

-1.1

11.8

301,836

300,377

-0.5

11.1

332,406

10.7

Normalised net income

232,489

227,200

-2.3

6.7

256,560

249,313

-2.8

9.7

272,573

9.3

Normalised EPS (c)

46.0

44.6

-3.0

6.1

51.6

48.6

-5.8

8.9

52.7

8.5

Reported EPS (c)

36.7

35.8

-2.5

21.9

42.4

40.1

-5.4

12.1

44.7

11.4

Net cash/(debt)*

(169,031)

(81,344)

-51.9

73,506

152,239

107.1

410,050

169.3

Source: Edison Investment Research. Note: *Excludes deferred financing fees.

Our net debt reduction increases now that we are not factoring in the remaining £75m potential share buyback. We forecast the company to return to a net cash position in FY18.

The company noted that it would consider ways to return cash to shareholders (assuming no large acquisitions are undertaken), either via buybacks or initiating the payment of a dividend.

Valuation

Paysafe continues to trade at a discount to its peer group on all metrics. Some discount is justified to reflect the risk relating to its largest merchant’s activities in China, but in our view, the current discount is overdone. The major merchant reduced its contribution to revenues from 23% in FY15 to 20% in FY16 and we expect this to gradually reduce (by c 1% pa) as we expect faster growth from the remainder of the Paysafe business. The major merchant generates revenues across all three divisions - we estimate that the total loss of the Asia gateway business (reported in Payment Processing) would reduce FY17 EPS by c 20%.

Exhibit 4: Peer group valuation metrics

EV/Sales

EV/EBITDA

P/E

FY16

FY17e

FY18e

FY16

FY17e

FY18e

FY16

FY17e

FY18e

Paysafe

2.9

2.6

2.4

9.7

8.8

8.0

13.0

12.2

11.2

Payment processors

First Data

4.6

4.4

4.2

11.3

10.8

10.2

12.0

10.4

9.7

Global Payments Inc

4.9

4.6

4.2

15.3

13.6

12.8

21.9

18.6

17.1

PayPal

4.2

3.6

3.1

19.9

14.7

13.0

28.1

24.3

20.6

SafeCharge

2.6

2.3

2.0

8.3

7.2

6.3

14.9

13.4

11.7

Total System Services Inc

3.1

2.7

2.5

13.6

11.4

10.7

19.3

17.3

15.7

Vantiv

8.3

7.5

6.9

18.9

15.9

14.4

23.3

19.9

17.7

Wirecard

5.0

4.0

3.3

16.8

13.0

10.7

26.7

22.7

18.2

Worldpay

6.0

5.4

4.9

14.4

12.8

11.4

23.4

21.3

18.5

Worldline

2.5

2.1

1.4

12.8

10.3

9.1

27.3

24.0

20.9

Average

4.6

4.1

3.6

14.6

12.2

11.0

21.9

19.1

16.7

Discount to peer group average

-35%

-33%

-28%

-27%

-36%

-33%

Source: Bloomberg (as at 15 March), Edison Investment Research

Exhibit 5: Peer group financial metrics

EBITDA margin

Rev growth

EPS growth

FY16

FY17e

FY18e

FY16

FY17e

FY18e

FY16

FY17e

FY18e

Paysafe

30.1%

30.1%

30.3%

63.1%

10.4%

9.0%

64.7%

6.1%

8.9%

Payment processors

First Data

40.5%

40.9%

41.5%

1.3%

3.5%

4.4%

88.3%

15.1%

7.6%

Global Payments Inc

32.3%

33.5%

32.9%

13.0%

8.3%

7.9%

21.2%

17.4%

9.2%

PayPal

21.3%

24.7%

24.1%

17.2%

16.4%

16.5%

16.3%

15.7%

17.6%

SafeCharge

31.5%

32.0%

31.8%

6.7%

13.1%

14.9%

2.8%

10.8%

14.6%

Total System Services

22.7%

23.6%

23.7%

50.0%

15.3%

5.7%

14.2%

11.1%

10.6%

Vantiv

44.0%

47.4%

48.1%

13.3%

10.7%

8.7%

21.9%

17.1%

12.6%

Wirecard

29.9%

30.4%

30.6%

32.8%

27.4%

20.3%

57.2%

17.4%

25.1%

Worldpay

41.6%

42.0%

42.9%

14.5%

11.3%

9.8%

78.3%

9.8%

15.6%

Worldline

19.8%

20.1%

15.9%

6.7%

22.1%

43.2%

10.1%

13.6%

14.9%

Average

31.5%

32.7%

32.4%

17.3%

14.2%

14.6%

34.5%

14.2%

14.2%

Source: Bloomberg (as at 15 March), Edison Investment Research

Exhibit 6: Financial summary

$'000s

2014

2015

2016

2017e

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

364,954

613,392

1,000,282

1,103,865

1,203,034

1,298,114

Cost of Sales

(187,298)

(316,922)

(457,420)

(511,137)

(569,354)

(618,775)

Gross Profit

177,656

296,470

542,862

592,728

633,680

679,339

EBITDA

 

 

82,946

152,620

300,825

332,487

364,785

398,866

Company EBITDA

 

 

85,965

152,563

300,825

332,487

364,785

398,866

Operating Profit (before amort acq intang, SBP and except.)

71,257

133,201

268,251

295,019

323,817

354,197

Amortisation of acquired intangibles

(9,200)

(31,900)

(51,900)

(53,000)

(53,000)

(53,000)

Exceptionals

7,219

(60,986)

(8,249)

0

0

0

Share-based payments

(8,274)

(14,089)

(13,726)

(10,000)

(10,000)

(10,000)

Operating Profit

61,002

26,226

194,376

232,019

260,817

291,197

Net Interest

(2,024)

(14,418)

(26,383)

(24,543)

(23,440)

(21,792)

Profit Before Tax (norm)

 

 

69,233

118,783

241,868

270,476

300,377

332,406

Profit Before Tax (FRS 3)

 

 

58,978

11,808

167,993

207,476

237,377

269,406

Tax

(1,303)

(4,405)

(25,972)

(33,196)

(40,354)

(48,493)

Profit After Tax (norm)

67,703

108,686

212,968

227,200

249,313

272,573

Profit After Tax (FRS3)

57,675

7,403

142,021

174,280

197,023

220,913

Average Number of Shares Outstanding (m)

277.7

399.8

483.6

486.7

490.9

494.1

EPS - normalised (c)

 

 

22.0

25.6

42.1

44.6

48.6

52.7

EPS - FRS 3 (c)

 

 

20.8

1.9

29.4

35.8

40.1

44.7

DPS (c)

0.00

0.00

0.00

0.00

0.00

0.00

Gross Margin (%)

48.7%

48.3%

54.3%

53.7%

52.7%

52.3%

EBITDA Margin (%)

22.7%

24.9%

30.1%

30.1%

30.3%

30.7%

Company EBITDA Margin (%)

23.6%

24.9%

30.1%

30.1%

30.3%

30.7%

Operating Margin (before am and except.) (%)

19.5%

21.7%

26.8%

26.7%

26.9%

27.3%

BALANCE SHEET

Fixed Assets

 

 

295,955

1,569,269

1,552,326

1,521,012

1,491,166

1,462,422

Intangible Assets

284,723

1,548,253

1,518,445

1,481,600

1,448,221

1,418,146

Tangible Assets

10,114

18,492

23,452

28,984

32,516

33,847

Other Fixed Assets

1,118

2,524

10,429

10,429

10,429

10,429

Current Assets

 

 

177,275

259,045

420,313

586,605

782,630

1,007,090

Cash & cash equivalents

 

 

109,893

117,875

231,157

380,575

556,612

759,852

Restricted NETELLER cash

 

 

8,777

29,070

31,854

35,039

38,543

42,398

Cash held as reserves & settlement assets

 

 

38,607

66,341

100,459

110,505

121,555

133,711

Receivable from Members & Merchants

 

 

0

0

0

0

0

0

Trade and other debtors

 

 

19,998

45,759

56,843

60,486

65,920

71,130

Current Liabilities

 

 

114,410

170,943

232,617

269,658

265,838

339,784

Creditors

58,240

121,070

175,464

186,362

183,477

195,258

Payable to Members/Merchant liability

30,591

16,758

18,547

20,402

22,442

24,686

Short term borrowings

25,579

33,115

38,606

62,895

59,920

119,840

Long Term Liabilities

 

 

150,498

582,804

521,788

449,069

394,498

280,007

Long term borrowings

107,205

494,410

456,570

399,024

344,453

229,962

Other long term liabilities

43,293

88,394

65,218

50,045

50,045

50,045

Net Assets

 

 

208,322

1,074,567

1,218,234

1,388,890

1,613,460

1,849,721

CASH FLOW

Operating Cash Flow

 

 

42,699

91,711

278,487

330,302

359,125

391,671

Net Interest

(1,873)

(8,403)

(12,459)

(19,194)

(18,091)

(16,443)

Tax

(1,564)

(4,929)

(10,186)

(33,196)

(40,354)

(48,493)

Capex

(11,094)

(23,721)

(53,698)

(59,155)

(64,121)

(68,925)

Acquisitions/disposals

(169,192)

(1,102,070)

(43,827)

(8,910)

(2,975)

0

Financing

(4,939)

670,173

(13,482)

(27,173)

0

0

Dividends

0

0

0

0

0

0

Net Cash Flow

(145,963)

(377,239)

144,835

182,675

233,584

257,811

Opening net (debt)/cash

 

 

118,389

(22,891)

(409,650)

(264,019)

(81,344)

152,239

HP finance leases initiated

0

0

0

0

0

0

Other

4,683

(9,520)

796

0

0

0

Closing net (debt)/cash

 

 

(22,891)

(409,650)

(264,019)

(81,344)

152,239

410,050

Source: Paysafe, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Paysafe Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Paysafe Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Bowleven — Crown Ocean resolutions prevail

The results of the Bowleven general meeting (GM) were released this morning, with eight of the nine resolutions passed. This has led to the removal as directors of all but two of the board: the chairman Billy Allan and COO David Clarkson. They are joined by two additions proposed by Crown Ocean Capital: Eli Chahin and Christopher Ashworth. The results of the votes were all close run, with between 49.4% and 54.8% voting for. Given this, and the split board, we are unsure as to the near-term future for the company’s strategy. We would expect the new board to meet as a matter of urgency to look to resolve this uncertainty.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free